Thinking of selling house and renting?

Alberto

Hi,
Im thinking of selling my three bed house in balbriggan, and then renting to see if house prices go down further-
thats if I can sell....
any info/advice in relation to that,

are houses selling in balbriggan- how much of a fall in value?
are bigger value reductions expected?

if it may only be a soft landing in the housing market, then I may not bother, but if I figure out that prices may drop alot in future, then I may try and sell now, and buy again in a few years,

any info appreciated,

Alberto

SanNJay

why would you sell to rent.. i don't understand that.

if you have a mortgage, you might aswell be paying it off rather than paying 'dead money' to a landlord, you'll still have your house when the market changes,

if you don't have a mortgage then your just waisting money by renting.

this is just my opinion

Sandra

Repolho

SanNJay wrote: »

why would you sell to rent.. i don't understand that.

if you have a mortgage, you might aswell be paying it off rather than paying 'dead money' to a landlord, you'll still have your house when the market changes,

if you don't have a mortgage then your just waisting money by renting.

this is just my opinion

Sandra

By selling house at a higher price and buying back at a lower price should prices fall as the OP expects.

In this situation, the interest on the depreciating asset is even more "dead money" than rent.

SanNJay

Repolho wrote: »

By selling house at a higher price and buying back at a lower price should prices fall as the OP expects.

In this situation, the interest on the depreciating asset is even more "dead money" than rent.

Would the people buying the house not have done this research and realised that. There hardly going to buy the house at the high price when they can buy it later at a low price.

Sandra

chump

SanNJay wrote: »

why would you sell to rent.. i don't understand that.

if you have a mortgage, you might aswell be paying it off rather than paying 'dead money' to a landlord, you'll still have your house when the market changes,

if you don't have a mortgage then your just waisting money by renting.

this is just my opinion

Sandra

Yea OP,
Renting is DEAD MONEY

And why pay a landlords mortgage?

Get a grip, and stay put.

Of course, aside from all this talk

It's probably not a great idea to try and time the market.

The_Conductor

chump wrote: »

Yea OP,
Renting is DEAD MONEY

And why pay a landlords mortgage?

Get a grip, and stay put.

Of course, aside from all this talk

It's probably not a great idea to try and time the market.

Renting is dead money? No- its paying for a service rendered. In general its probably less than the interest on a mortgage for a similar property would be- which is rent for money rather than property. Its irrelevant whether a landlord has a mortgage or not- thats their business- not yours. If you can rent a property for less than you can finance it- particularly in an era of falling asset prices, the maths are quite easy......

That said, personally I wouldn't try selling in the current market. If you are happy where you are at the moment- regardless of whether its falling in value or not- similar properties elsewhere are probably falling in a similar manner, and when the market does calm down- if you still want to move, you'll get a reciprochal reduction in the price of where-ever you choose to go to.

Property in Lucan is in many cases taking in excess of 12 months to sell- which probably isn't too different from Balbriggan- have a look at some of the threads in this forum for examples.

Not a good time to be buying or selling........

subway

chump wrote: »

Yea OP,
Renting is DEAD MONEY

And why pay a landlords mortgage?

heres an example for you.
the house i am looking to rent (viewing tomorrow) 3 bed suburban residence, north dublin.

montly rent = 1200 euros or 14,400 annually.

a house in the same block is for sale at 345000.
if we assume a reasonable 10% discount i could buy that house for 315000 cash.
tack on to that my 10% deposit and the mortgage stands at around 285000

for this example i will use a 5.75% mortage interest rate over 25yrs and a 3.5% deposit interest rate.

in the first 5 years of my mortage i will pay approx 75k in interest and will build approx 30k in equity (plus my 35k deposit). my mortgage payment will be 1800.

in the first 5 years of renting i will pay 72k in rent, and assuming i save the 600euro that i have saved over the mortgage payment and 35k deposit will have, at 3.5%, a total savings amount of roughly 81k in the bank

given that house prices are falling we might also assume that my 65k equity stake, if the value of the house is reduced by a further 10% has been reduced to 34k


so lets just run that again quickly.
cost of interest = 75k
cost of renting = 72k

buying equity build up in house = 65k (with conservative estimate of further 30k drop in house value)
renting equity build up in bank = 81k (not inflation adjusted)

so in 5 years i have savd my self a not insignificant 16k cash.
i also have 81k in the bank to put a deposit on my house.
assuming that the house i could have bought for 315k is now worth 285k i can get a mortgage of 204k instead of the previous option of 285k
a mortgage of 204k means i will be paying around 1300 a month on 25 year mortgage.
thats a saving of 500 euro per month for 25 years. or i could effectively reduce my mortgage term to 13 years @ 1800pm

to me the savings, not just in the 5 years but over the life of the mortgae, that i can see in these calculations rule out even the notion of even considering buying a house in todays markets.

or, you take the other view, rent is dead money, its never been a better time to buy...

subway

to the OP, you could try putting your house on the market, but it might be too late.

if its your family home, unless you've a largeamount of equity and can afford a big drop to get a quick sale then you might be waiting months to sell.
paying a mortgage and rent while waiting for your house to sell is a large gamble.

bren2002

This is a huge risk.

Think about the amount of money are about to start gambling with - 100,000's

If you can afford to stay where you are, and if you are happy to continue living there then reconsider your options.

I can see where you're coming from, I for 1 think houses will fall to at 70% off their peak values, but this could take 5 more years to come through the system.

However if you can afford (both head and wallet) to gamble the sums we are talking about then the best of luck to you. If not, stay put and stop reading anything about the state of the property market.

johnnyskeleton

One vital factor seems to me to be where you want to live in 5 years time?

If you are planning to sell your house, rent next door, then buy back the same house in 5 years time then it's a difficult question, and you have to consider a) the price you can get on sale b) the likely saving from renting (i.e. the difference between mortgage interest and rent) and c) the likely drops in price. However, given the vast discrepancy between house prices and rents at the moment, even if prices stayed the same it would work out cheaper to rent as opposed to remaining in your house. Remember too that money is only one consideration of many when it comes to accomodation.

If on the other hand, you are planning to sell your house, rent somewhere nearer to work, then buy a nicer house in a nicer area at the reduced price, then selling and renting seems to be a great choice to be honest, and if house prices continue to fall it would make great sense. Again, this is assuming that you have no particular affinity to your current abode.

Repolho

http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html?_r=1&ex=1184644800&en=b3624b89fe38ed22&ei=5070&oref=slogin#

Here is an interesting calculator for comparing buying versus renting.

Makes for interesting viewing!

SanNJay

smccarrick wrote: »

Renting is dead money? No- its paying for a service rendered. In general its probably less than the interest on a mortgage for a similar property would be- which is rent for money rather than property. .

the price of renting a house is usually the same if not more than a remortgage payment.

At least by paying a mortgage you'll have some substantial at the end. what will you have by renting?

Sandra

subway

SanNJay wrote: »

the price of renting a house is usually the same if not more than a remortgage payment.

At least by paying a mortgage you'll have some substantial at the end. what will you have by renting?

Sandra

see my post above or take a look at the calculator repolho linked.

by renting you will have a large amount of cash saved up instead of a small stake in the mortgage of house that is worth less than that mortgage

Moonbeam

The rental market in Balbriggan looks good at the moment, if you really wanted to you could rent your house out and let it pay for itself while renting somewhere cheaper?

The_Conductor

SanNJay wrote: »

the price of renting a house is usually the same if not more than a remortgage payment.

At least by paying a mortgage you'll have some substantial at the end. what will you have by renting?

Sandra

Present average rental returns do not agree with your assumption- sorry. Rental yields were hitherto massively subsidised by capital appreciation- and are now held down with oversupply of rental units.

If your rent is substantially less than a mortgage payment on the property you are buying- then you can have a far higher standard of living than you would otherwise have- or alternatively you can put the monthly saving towards another asset- perhaps a tax friendly pension contribution?

SimpleSam06

SanNJay wrote: »

Would the people buying the house not have done this research and realised that. There hardly going to buy the house at the high price when they can buy it later at a low price.

Actually, several posters recently have been bending over backwards to try to get people to buy in a falling market, unsuccessfully I might add.

I have to give credit to the OP however, hes actually trying to short his own house. You don't see that every day. It would only work in very specific circumstances, but it might conceivably make money in a falling market. Gutsy play, if it works, although its a bit of a gamble.

Repolho

With the oversupply of rental properties on the market at the moment, you could always put your house on the market and stay living there. If you did manage to find a buyer, then there would be plenty of time to find a place to rent while the sale is going through. At least this way, you would not be caught paying rent and a mortgage.

If you get this far, then the risk only comes into play when you try to buy back into the market ie when you try to time the bottom of the market.

As others have posted, when buying / selling a family home there is a lot more to consider than the financials.

astrofool

The transaction costs also inhibit this type of shorting (solicitor, EA, Stamp duty), you might also be missing out on TRS depending on when you sell in the year.

I'd say the banks would have loved that type of inhibition to shorting when their shares were tanking. They might be brining in rules about naked shorts (shorting when you haven't actually borrowed the share yet ).

DonJose

SanNJay wrote: »

the price of renting a house is usually the same if not more than a remortgage payment.

At least by paying a mortgage you'll have some substantial at the end. what will you have by renting?

That is just incorrect. I have not come across one property where the mortgage is less that the rent. For example I am looking at a 4 bed semi which is for sale and for rent. Price is €319k a 30 year mortgage would cost roughly €1,600 + mortgage protection + insurance, this property is renting for €900.

I can give you dozens more explains of similar properties. Please show me one property that is for sale and for rent where the rent actually pays the mortgage.

IanCurtis

SanNJay wrote: »

the price of renting a house is usually the same if not more than a remortgage payment.

At least by paying a mortgage you'll have some substantial at the end. what will you have by renting?

Sandra

She just doesn't get it :pac::pac::pac::pac:

Even with a substantial list of figures and calculations, she just says the same thing again.

Ah God bless the Irish and property!

Ridiculous.